Long-Term Care Premium Hike Getting Scrutiny

Hearings in the House are to be held today (November 30) on the sharp increases in Federal Long-Term Care Insurance Program premiums affecting the large majority of enrollees that took effect November 1. Those increases, averaging 83 percent, applied to nearly all of those who enrolled before August 2015, when a lesser increase had applied for those enrolling from that point forward. Numerous members of Congress have been pushing for hearings since the rate increase was announced in the summer—but Congress was in recess most of the time since. Since the announcement a special enrollee decision period was conducted in which enrollees could decrease benefits to soften the cost impact, accept the full increase by doing nothing, or in some cases stop paying premiums while remaining eligible for a much-reduced paid-up benefit. Issues likely to arise include how OPM and the underwriter, the John Hancock insurance company, could have been so far off in their projections of the program’s income and outflow to justify such steep increases—especially since the program’s prior contract was awarded just seven years ago—and why enrollees are bearing the burden of those miscalculations. It’s unclear what practical impact the scrutiny might have in the short run, since the replacement contract allowing for the higher premiums is already in effect—and John Hancock was the only bidder. However, the hearing might set the stage for changes in law designed to prevent a repeat.

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